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Borrowers stung by upfront fees for bogus online loans

Consumers looking for loans online are again being stung by paying fees or insurance charges upfront to scammers who have stolen the identity of legitimate credit providers.

In the latest case reported to Consumer Protection, a small Sydney-based operator, Finance Money Australia Pty Ltd, had their identity stolen and a WA consumer lost $4,000 after paying upfront taxes and insurance fees for an unsecured loan which he was told had been approved. Many other consumers throughout Australia are feared to have lost a total of up to $20,000 after falling victim to the fake website, which has now been closed down.

In June 2015, WA ScamNet issued a warning after a genuine Perth-based broker, Mercury Money, had their identity stolen and two consumers lost a total of $10,000. Three other consumers almost lost money, but contacted the real Mercury Money and discovered they were being scammed before it was too late.

So far this year, 9 victims in WA have reported losing almost $20,000 to online loan scams. In 2014, WA ScamNet received reports from 16 victims who had lost more than $36,000.

Acting Commissioner for Consumer Protection Gary Newcombe said these scams target people who are in need of money and can least afford to lose it to a scam.

“The heartless nature of this type of scam is particularly disturbing, as it targets susceptible consumers who may have had difficulties getting loans from traditional sources and then preys on their excitement when they believe their loan application has been successful,” Mr Newcombe said.

“Genuine credit providers are also being affected after having their business identity stolen and fake websites and email addresses being set up by replicating their name, but with only slight differences which are not immediately obvious.

“We warn consumers not to reply to what may be a scam email and not to click on links in these emails or click on online ads which may take them to fake websites.

“We also caution consumers who may be tempted to provide their personal details, including their income, on “lead generating” websites. The consumer’s details are passed on to third party lenders, but there is no guarantee that scammers aren’t getting hold of these details in order to impersonate legitimate credit providers or finance brokers.

“As the scammers are using the names of genuine loan providers, registration checks with ASIC will turn up a positive result, so we advise consumers to independently verify the authenticity of the company by using their contact details on their registration or via the white or yellow pages’ phone directories.

“These added checks should be carried out particularly if the loan provider is asking the applicant to pay money upfront. A request to transfer the money to Australian or overseas bank accounts or by wire transfer services is also an indication that the loan offer may be a scam.

“If in doubt, don’t send any money and contact Consumer Protection or ASIC who can provide further advice.”

Online loan scam prevention tips:

When looking for a loan online check the lender is licensed by looking on the Australian Securities and Investments Commissioner (ASIC) website www.asic.gov.au BUT remember that scammers also have access to this information and can copy the details of a registered credit provider in order to pretend to be them.

Double check that a website is the official site for a lender and not a fake version – look for a padlock symbol in the web address to show it is secure and usually if it’s in Australia it will end with .com.au

Verify that the email address truly belongs to the registered company you think you are dealing with. Generally scammers use free email services such as gmail or yahoo.

Be very suspicious about requests to pay fees upfront that involve wire transferring the money or putting it into bank accounts. Get advice from Consumer Protection (1300 30 40 54) or ASIC (1300 300 630) before going ahead.

When sending emails type the address into your ‘To’ box rather than hitting reply to prevent conversations with hackers.

Remember that just because a phone number begins with an Australian prefix does not mean the person you are talking to is based in this country – they could be re-routing the number using technology known as VoIP.

Consumers should avoid clicking on links in emails or clicking on online advertisements as they can take you to fake websites.

There is also good advice on ASIC’s MoneySmart website: www.moneysmart.gov.au. Licence checks for credit providers can be made on the ASIC Connect website: www.asic.gov.au (click on Professional Registers or here) or the ASIC phone number is 1300 300 630.